US stocks hit record; NAFTA progress boosts Mexican peso

Bloomberg

US stocks hit a new high, while the Canadian dollar and Mexican
peso scored gains after a report
of progress in negotiations over the North American Free Trade Agreement (NAFTA).
The S&P 500 Index approached the 2,600 mark, reaching its highest level on record. While the Thanksgiving holiday gives traders an excuse to pause, equities are heading into the end of the year near their peaks, with investors optimistic about global growth and company earnings. Goldman Sachs Group Inc. raised its 2018 target for the index to 2,850 from 2,500, citing an expansion in profits and valuations.
“Investors can be reassured by the strength and durability of the current economic cycle,” Peter Oppenheimer, Goldman’s chief global equity strategist, said in a note on Tuesday. “While it has already been a long cycle, the unwinding of the financial crisis has also meant that, until recently, it has been sub-par in terms of strength—as is often the case following financial crises.”
The loonie rose the most in over two weeks and peso hit a one-month high after Juan Pablo Castanon, head of Mexico’s business chamber, said that negotiators were close to finishing work on telecom, energy and digital commerce provisions of NAFTA. The dollar declined.
Sterling rose and gilts advanced amid reports PM Theresa May has the backing of ministers to offer the EU more money to break the Brexit deadlock. West Texas crude gained while gold advanced.
In the US, confirmation that the Fed Chair Janet Yellen will leave the board in February creates a fourth vacancy for President Trump to fill, making it trickier for investors to bet on the central bank’s interest rate trajectory next year.
The Stoxx Europe 600 Index advanced and German shares outperformed even as the country’s political stalemate continued.
Officials have said the ECB is likely to make multiple small adjustments to its guidance on monetary policy next year rather than any major change in language as it ends quantitative easing. The German Chancellor Angela Merkel said she would prefer new elections if she can’t put together a majority.
“Markets are shrugging off the political issues in Germany,” Peter Boockvar, chief market analyst at Lindsey Group, wrote. “Mario Draghi is the most important factor for European markets, especially in 2018, not German politics.”
The Australian dollar dropped to a five-month low after suggestions from the central bank that interest rates will stay lower for longer.
Minutes from the ECB’s October meeting due on Thursday could show dissent in the discussion about tapering. The minutes from the Fed’s latest policy meeting will be out on Wednesday. The UK will announce its budget on Wednesday.
The S&P 500 Index climbed 0.68 percent at 10:49 am New York time. The Stoxx Europe 600 Index advanced 0.6 percent. The UK’s FTSE 100 Index increased 0.4 percent. Germany’s DAX Index jumped 1 percent to the highest in almost two weeks.
The MSCI Emerging Market Index increased 1.4 percent to the highest in more than six years.